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Botswana's Finance Minister Announces Changes To Income Tax Act

by Robert Lee, Tax-News.com, London

15 December 2003


Botswana’s parliament has amended the Income Tax Act in a bid to tighten up tax compliance, in addition to providing further clarification on certain provisions of the Act.

Presenting the amendment bill to parliament, Finance and Development Planning Minister Baledzi Gaolathe noted that one of the changes will mean a new regime for deductions relating to bad debts carried by banking institutions.

Amendments to Section 41 of the Act also lay down new rules in respect of deductions for VAT (Value Added Tax). In this respect, Gaolathe said that VAT amounts paid on inputs could not be allowed as deductions in calculating taxable income because they were already claimable as input tax credit in terms of the VAT law.

Other amendments to the Income Tax Act include a tighter definition of the 3% withholding tax charged on construction contracts in order to combat evasion of the levy in the sector.

The Finance Minister also announced the removal of the exemption from the 15% withholding tax on dividends for ‘associated companies’ (a firm where the parent company holds more than 20% of its stock.)


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